The determinants of the crises upon the technology firms in turkey - Essay Example

The business cycle or economic cycle refers to the ups and downs seen somewhat simultaneously in most parts of an economy. The cycle involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity), alternating with periods of relative stagnation or decline (contraction or recession). These fluctuations are often measured using the real gross domestic product.To call those alternances "cycles" is rather misleading as they don't tend to repeat at fairly regular time intervals.

Most observers find that their lengths (from peak to peak, or from trough to trough) vary, so that cycles are not mechanical in their regularity. Since no two cycles are alike in their details, some economists dispute the existence of cycles and use the word "fluctuations" (or the like) instead. Others see enough similarities between cycles that the cycle is a valid basis of studying the state of the economy. A key question is whether or not there are similar mechanisms that generate recessions and/or booms that exist in capitalist economies so that the dynamics that appear as a cycle will be seen again and again.

Now let us closely observe the main types of business cycles enumerated by Joseph Schumpeter and others in this field have been named after their discoverers or proposers:1. The Kitchin inventory cycle (3-5 years) -- after Joseph Kitchin. 2. The Juglar fixed investment cycle (7-11 years) -- after Clement Juglar. 3. The Kuznets infrastructural investment cycle (15-25 years) -- after Simon Kuznets, Nobel Laureate. 4. The Kondratiev wave or cycle (45-60 years) -- after Nikolai Kondratiev. Edward R Dewey, who formed The Foundation for the Study of Cycles, studied cycles in everything -- including economic data.. The paper tells that in the Juglar cycle, which is sometimes called "the" business cycle and is the main focus of this entry, recovery, and prosperity are associated with increases in productivity, consumer confidence, aggregate demand, and prices.

In the cycles before World War II or that of the late 1990s in the United States, the growth periods usually ended with the failure of speculative investments built on a bubble of confidence that bursts or deflates. In these cycles, the periods of contraction and stagnation reflect a purging of unsuccessful enterprises as resources are transferred by market forces from less productive uses to more productive uses. Cycles between 1945 and the 1990s in the United States were generally more restrained and followed political factors, such as fiscal policy and monetary policy.

Automatic stabilization due the government's budget helped moderate the cycle even without conscious action by policy-makers. Because the periods of stagnation are painful for many who lose their jobs, pressure arises for politicians to try to smooth out the oscillations. An important goal of all Western nations since the Great Depression has been to limit the dips, and until 2001 or so, a comparable period of economic malaise was avoided. Government intervention in the economy can be risky, however.

For instance, some of Herbert Hoover's efforts (including tax increases) are wide, though not universally, believed to have deepened the depression. This was perhaps because his ideas were uninformed by Keynesian economics.